President Obama Increases Minimum Wage to $10.10 for Government Contractors

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On Wednesday, February 12, 2014, President Obama signed an Executive Order that increases the minimum wage for employees of federal contractors from $7.25 to $10.10. The Executive Order goes into effect on January 1, 2015 and only applies to government contracts awarded after January 1, 2015.

While the Executive Order will not affect employees of government contractors under wage determinations with prevailing wages higher than $10.10 per hour, it will likely raise the hourly rates for employees in rural areas where the prevailing wages are lower than $10.10 per hour. The Executive Order potentially applies to employees who are not covered by wage determinations but provide services in support of the performance of a government contract or subcontract as well as employees working for employers with government supply contracts for rates lower than $10.10 per hour. 

The Executive Order provides that the Secretary of Labor will issue implementing regulations by October 1, 2014.

The Executive Order does not apply to employers who are not government contractors or subcontractors. To the extent this change raises wages of employees in the same locality, however, the Executive Order could result in wage pressure on private employers. President Obama has made clear his support for Congress increasing the federal minimum wage to $10.10 per hour.